Well, Im going to ask my CPA about the best way to deal with it and put in my best faith effort to comply, maybe contact the IRS and ask how to best report it. I get that there are practical problems, I have no illusions that this means my obligation to report changes.

Maybe you should join PACER, access Clonie's lawsuit, there shoulds be a TiltWare address there, the company itself was served and has responded?

Take it how you want, you seem to find fault with ANY info anyone posts so no offence taken since the credibilty lacks anyway.

I have a great idea, why don't YOU write to or call the IRS / Treasury and ask them what to do?

obg

I've had no problems finding current, accurate addresses for any site, including Full Tilt and Absolute. Full Tilt wasn't the toughest (Eurolinx was); Full Tilt's address is available if you look hard for it.

I'll be posting all the sites' addresses on my tax blog later this week.

people dont thank you enough Russ. Thanks for helping out this forum so much

Thanks Russ, greatly appreciate it

Russ must have the greatest content to post count ratio on the site.

My question to Russ.

If I go overseas. Purchase chips for play in excess of 10K. Do I have to file the report? If not why not?

I think this is the question we have to ask Treasury as well.

It is bizarre to think of gaming chips as a foreign account.

Also, Russ has asked this question every year. So I am curious why in past years it wasn't an interest in a foreign account and this year it is. Isn't it always an interest or never? Do we have to go back and file prior years?

mrick

+1

TY Russ

Registered as Filco Limited in Alderney so unless they've moved or reorganized:

http://www.ileaurigny.net/index.php/pid/28/view/1010

STATES OF ALDERNEY
ALDERNEY OFFICIAL GAZETTE
Published by Authority
VOLUME FOURTEEN
ALDERNEY, 24th August 2007 No 26


NOTICE OF APPLICATION FOR FULL eGAMBLING LICENCE

An application for a full eGambling licence dated 9th August 2007 has been made to the Alderney Gambling Control Commission (“the Commission”) under the Alderney eGambling Ordinance, 2006 and the Alderney eGambling Regulations, 2006, by:-

FILCO LIMITED

Whose registered office is:- York House, Victoria Street, Alderney, GY9 3TA

Any person wishing to raise any objection to this application so that the objection shall be considered by the Commission in accordance with regulation 8 of the Alderney eGambling Regulations 2006 should, within 14 days of the date of publication of this notice, deliver or send to the offices of the Commission a written statement of the objection and the grounds on which it has been raised.

Signed:Christina McCulloch
For and on behalf of :Filco Limited
Dated:20th August 2007



0140042

See linky:


http://www.fulltiltpoker.com/images/...etter-v1.6.pdf

ty ty ty Russ

Questions are withdrawn. I think the definitions of financial institution in the code is plain enough. I agree with Russ.

mrick

Russ,

I believe that my online accounts at poker web sites are "transfer service" accounts which would not be subject to foreign bank account reporting. What has changed or been published (beyond an e-mail) that clarifies this 100%.

Thanks,

Chip

interesting look chip

Interesting. This used to be a problem with certain motherboards several years ago, but I thought this situation was pretty much fixed. I wonder how old the hardware is that they're running.

100% clarification doesn't exist on this. The only way to know for sure is to not report an online gambling account, be arrested, tried, and find out if you're found guilty or not guilty. (There's an alternative path, too: civil fines. You'd have to appeal those administratively, and eventually to the courts.)

Casinos in the United States fall under the same rules as banks for numerous IRS and Treasury regulations. That's a fact. I've felt for some time that this ruling (that foreign/online casinos are financial institutions) was inevitable. They make direct deposits into individuals' bank accounts. They take money directly from players' bank accounts. They handle lots of money. Players can transfer money to other players. If it looks like a duck, walks like a duck,....

As far as transfer sites, just remember that Neteller (a transfer site) is absolutely a foreign financial institution.

You have a choice. You can report the online gambling sites. Or you can skip it. It's not likely that by not reporting the sites you will get in trouble. However, if you are chosen by the IRS/Treasury to be a test case, you will have to spend lots of money defending yourself, your life will be disrupted for a long period of time (ask one of the criminal defense attorneys who posts here about fighting the US Government), and you could find yourself in prison or out $100,000. It's your decision on what you do, but the letter of the law is clear and the Treasury's/IRS's opinion on the issue is also clear.

-- Russ Fox

russ, why suggest they could throw you in prison when there is 0% chance they would do that to someone who pays their taxes..its just fear mongering.

this is far too much of a grey area for them to ever do that. frankly, you, as well as anyone, know it isn't even a certainty whether it does qualify as a foreign transfer service. they don't imprison people over issues that have no certain rule and no precedent.

I don't think Russ is saying you will definately go to prison. It's a possibility. His point is that in his opinion, supported by what he has been told by the Treasury, you should report foreign poker accounts. Nobody knows what will happen if you don't and get audited by the IRS or questioned by the Treasury. There is no certainty that you will ever be audited by the IRS or questioned by the Treasury. Why risk it. Ignorance is never going to work as a defense. Nobody knows what penalty, if any, will be assessed. However, we know the maximum penalty and it's pretty severe. Will they hit you with the maximum penalty? Probably not, but even if the penalty is only a $500 fine and having the treasury dig through your financial records, why risk it, it's not worth the headache.

He has simply passed on information he has received. What you do with that information is up to you.

As far as 100 percent clarification goes, you will never get it. The IRS won't even clarify what a session consists of for tax reporting purposes. Dont expect to get any kind of clarification regarding the Treasury form.

Exactly.

If you are accused of willfully not reporting a foreign financial account the minimum fine is $100,000 per account. That's the problem with not reporting an account. As I said, you're not likely to get caught, but if you do the penalty is extreme.

It's the same reason people buy insurance. Your chance of having something bad happen to you is low, but if it does you need that coverage. With this requirement, you're not likely to get caught but if you do you'll be much happier if you had completed the form.

-- Russ Fox

Maybe we are just talking over each other here or something. I am certainly not advocating willfully doing anything wrong. You said yourself you are not sure if it can be deemed a foreign transfer service and not be subject to this stuff. If they decide you should have done this, you will simply, and HONESTLY reply, that you did not agree based on the rules and precedent. They may ultimately decide against you, but it is not dishonest to say you don't believe you have to do it. Just like if you file as a pro and they say you aren't. You make your case, they choose to accept it or nor accept it, but they don't flip out that you took that stance.

The issue with the insurance I would 100% agree with if it (and I am just speculating here) didn't raise your audit risks by a huge amount when, as joked above, you report "lolgopsucks" as your account number on Absolute. If it raises your audit risk, and you can make a fair and honest case against it being a foreign account, then even if they eventually decided to officially disagree with you (which is probably unlikely due to their intentional decisions not to take official stances like that), they aren't going to nail you like you imply.

The naiveté here is simply mind boggling.

your statement is based on what? find me any case in the last 10 years where the IRS slammed someone who payed their taxes in full for not filing how they wanted over an issue they had not clarified. please find or go away as you are worthless.

I don't think the IRS ever uses the word "session". They use the words "transaction", "wins" and "losses". There is some clarification now.

Excerpt:
...A key question in interpreting § 165(d) is the significance of the term “transactions.” The statute refers to gains and losses in terms of wagering transactions. Some would contend that transaction means every single play in a game of chance or every wager made. Under that reading, a taxpayer would have to calculate the gain or loss on every transaction separately and treat every play or wager as a taxable event. The gambler would also have to trace and recompute the
basis through all transactions to calculate the result of each play or wager. Courts considering that reading have found it unduly burdensome and unreasonable. See Green v. Commissioner, 66 T.C. 538 (1976); Szkirscak v. Commissioner, T.C. Memo. 1980-129. Moreover, the statute uses the plural term “transactions” implying that gain or loss may be calculated over a series of separate plays or wagers.

The better view is that a casual gambler, such as the taxpayer who plays the slot machines, recognizes a wagering gain or loss at the time she redeems her tokens. We think that the fluctuating wins and losses left in play are not accessions to wealth until the taxpayer redeems her tokens and can definitively calculate the amount above or below basis (the wager) realized. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). For example, a casual gambler who enters a casino with $100 and redeems his or her tokens for $300 after playing the slot machines has a wagering gain of $200 ($300 - $100). This is true even though the taxpayer may have had $1,000 in winning spins and $700 in losing spins during the course of play. 2

Likewise, a casual gambler who enters a casino with $100 and loses the entire amount after playing the slot machines has a wagering loss of $100, even though the casual gambler may have had winning spins of $1,000 and losing spins of $1,100 during the course of play.

http://www.irs.ustreas.gov/pub/irs-utl/am2008011.pdf

Consider the gambler who signs up at Fortune Lounge and gets a $100 Bonus for a $1000 deposit with wagering requirements. (Ah - those were the days). When is the loss measured? After the blackjack, craps, video poker, slots, roulette and all the other games aggregate to meet the wagering requirement, and the tokens are redeemed. How do you like that for a session?

I think it is a fair point about the criminal charges. Keep your records. Pay your taxes. Then as all seem agreed, one is not likely to be prosecuted criminally, but then there is no certainty - other then death and taxes :-).

A bit more guidance for the Schedule C filer as to expenses:

http://www.irs.gov/pub/irs-utl/am2008013.pdf

mrick

After spending a little time reading about FBAR enforcement by the IRS, IMHO opinion I think insideman is right in that the chances of going to jail over not filing the FBAR for a poker site is basically 0%, at least right now.

That being said, playing online poker means reporting income from a legal grey area with limited actual documentation provided by the sites, no clear definition of sessions, etc. Even with good records, there are potential IRS issues if they come knocking.

If you get audited, even if you reported everything in a way that you think is correct, do you want the IRS to have the leverage of "well, even if this is right you didnt report a foreign account, so the penalty is at least $10K or up to $100K and possible prison if we determine its willfull. Or you can just agree to our interpretation of your tax liability and write us a check for another $25K"

So Im not sure that getting hung up on the possibility of jail is really useful (Russ basically said the chances of getting jailed for this are very, very small). The bottom line is that the IRS says these are financial accounts and the law gives them a hammer to use if you dont report these financial accounts. Therefore, report them.

I think what you're missing is that Russ Fox is an accountant, not a lawyer. The IRS has informed Russ via email that poker sites are foreign financial accounts. I want my tax accountant to follow GAAP, not just make it up as he goes along.

You may be right that the IRS/Treasury Dept is completely wrong about poker sites being foreign financial institutions; however, that is a question of law for the courts to decide. It's not something that my tax accountant should decide for me.